Contact our analyst Lingga
9% upside. HOLD.
25th August, 2020
Target price Rp5,750
Third-Party Funds rose 11.3% YoY in 1H20 and the CASA ratio increased by 5.4%, with Current Accounts up 18.4% YoY, Saving Accounts 7.1% YoY. BNI remains focused on CASA through several strategies, namely improving relationships with corporate and institutional customers, optimizing digital clients and growing mobile and internet banking. Growth in demand deposits is supported by business loans (medium segment and small) as well as building relationships with government agencies, state-owned enterprises, as well as the private sector. With higher CASA, the Cost of Funds fell to 2.9%, down 0.3% YoY, minimizing the decrease in the Net Interest Margin to 4.5%, down only 0.4%.
Stable Loan growth
Loan growth was 5% YoY. This growth was driven by private corporations which grew 12.6% YoY, including the transportation and manufacturing sectors, particularly palm oil. Credit growth to SOEs was 6.1% YoY, especially in electricity, construction and telecommunications. Loan growth to the middle segment was held back -9.1% YoY because it has the highest NPLs. Growth in consumer loans cane mainly from 6% YoY growth in mortgages and 11.6% YoY for payroll loans. We still forecast credit growth in the range of 4-6% in 2020.
Total restructured loans as at the end of June 2020 reached IDR 99.9 trillion (68.2% of the target). Approval for restructuring has been granted to 203,000 debtors with a total of IDR 119.3 trillion (81.3% of the target) or 20.7% of the total loans. BNI plans to complete the credit restructuring program within 2020. The estimated total loans restructured up to 3Q20 will be around IDR 126-130 trillion, lower than the initial target of IDR 146 trillion. Restructuring for debtors in the corporate, medium and consumer segments has reached more than 90% of the target, IDR 48.4 trillion in the corporate segment, IDR 23.9 trillion in the medium segment, and IDR 10.1 trillion in the consumer segment. For the small business segment realization up to June only reached IDR 36.9 trillion, 63% of the target. 18.8% of the total were restructure with deferred principal payments, 27.3% with postponed interest payments, and the remaining 53.9% used a combination of postponement of payments principal and interest and lower interest rates.
Valuation: 9% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 5750 or trading at 0.7x PBV which gives 9% potential upside, Hold.